2023 Reverse Mortgage Lending Limits
The Federal Housing Administration (FHA) increased the Home Equity Conversion Mortgage (HECM) loan limits on home values up to $1,089,300 in 2023. This substantial increase—up from $970,800 in 2022—marks the first time in history that reverse mortgage home value limits surpass $1 million.
This substantial increase reflects steep surges in home prices across America, Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon said in a press release.
Key Takeaway: Local markets have experienced unprecedented home price appreciation in recent years, which has forced the FHA to increase the mortgage lending limits by 18% in 2022 and again by 12% in 2023—and home appreciation hikes show no signs of slowing. This gives senior homeowners with high-value homes significant borrowing power.
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Reverse Mortgage Lending Limits for 2023
HUD’s reverse mortgage lending limit is basically the cap on how much one can borrow against his or her home. Reverse mortgage lending limits are updated annually to account for changes in the housing market and average home prices. In 2023, the HECM home value limit for calculating maximum reverse mortgage loan amounts is $1,089,300 for all mortgages assigned from January 1, 2023, through December 31, 2023.
This means that the maximum reverse mortgage companies can offer in loan form is a percentage of the owner’s total equity based on the home’s value, up to $1,089,300. (More on how to calculate your borrowing amount below.)
But know that this doesn’t mean you can actually get a reverse mortgage loan up to $1,089,300. Most lenders can offer somewhere between 30% and 60% of available equity based on those factors.
Loan amounts depend on:
- The home value
- The interest rate
- The age of the youngest borrower
- Lender LTV percentages
Many private lending companies also offer proprietary, jumbo reverse mortgages, with loans up to $4 million, which can be awarded to homes valued as high as $10 million.
If your home is valued above the lending limit, you might consider getting a private reverse mortgage with higher loan limits than HUD designates.
History of Reverse Mortgage Loan Lending Limits
The government authorizes limit increases to help borrowers keep up with spikes in home values like those that we have seen in recent years. The Federal Reserve Bank of St. Louis says that the median sales price of houses in the U.S. reached $454,900 in Q3 2022, up $21,800 in January 2022, just two quarters prior.
- 2019 limit: $726,525
- 2020 limit: $756,600
- 2021 limit: $822,375
- 2022 limit: $970,800
So, How Much Can You Borrow?
Traditional HECMs are backed by HUD and have tighter limits on how much you can borrow. The maximum home value used amount you can borrow on a reverse mortgage with government backing is $1,039,800 in 2023.
However, if you qualify for a private or jumbo reverse mortgage loan, you can use a home valued as high as $10 million, which could mean proceeds of get up to $4 million of equity in the property. Many jumbo reverse mortgages are held by homeowners in California or Maryland where home values tend to be higher than the national average
|HECM Reverse Mortgage||Jumbo Reverse Mortgage|
|Borrower minimum age: 62||Borrower minimum age: 55|
|Max lending limit: $1,089,300||Max lending limit: $4,000,000|
Again, the maximum home value set by the government that is used to determine your proceeds (up to $1,089,300 or $4 million) is different than the maximum loan amount you can receive from a lender.
LTV (loan-to-value) percentages are based on age and current interest rates. The oldest borrower in the lowest rate economy could get a loan up to 75% of the home’s appraised value, up to $1,089,300. In this instance, the most they could receive for a HECM in 2023 is $816,000 ($1,089,300 x 75%).
Let’s take a look at a more realistic example:
If your home appraises at $600,000, then your actual loan amount would be a percentage of $600,000, depending on the lender’s LTV table.
So, let’s say you found a lender that could offer 60% LTV on your home that’s worth $600,000. In this instance, the lender would give you $360,000 in reverse mortgage funds ($600,000 x 60%).
The only thing that could increase that amount is if a lender was able to offer a lower interest rate, which could make a few thousand more dollars available with the same appraised value. This is why it’s important to shop around and get at least one competing offer.
Unlike traditional “forward” mortgages where lenders determine the amount you can borrow based on your ongoing earning potential and ability to repay based on your personal financials, reverse mortgage loan limits are based primarily on the home’s value.
Reverse mortgage lending limits are adjusted annually based on home values and insurance limits. The government regulates HECM reverse mortgages, but not jumbo reverse mortgages. This results in higher lending limits for jumbos, which can help senior homeowners with high-value homes qualify for a loan. To determine your lending limit and what reverse mortgage type best suits you, contact a reverse mortgage company near you.